Business
This is why India’s consumer market is a $1 trillion investment opportunity
The fundamentals of the Indian economy remain strong, as RBI Governor Shaktikanta Das recently stated. India’s growth rate is among the fastest in the world, retail inflation has moderated, buffer food stocks are abundant, forex reserves are substantial, and the current account deficit is expected to remain “well within sustainable levels.”
Domestic consumption is making a strong comeback, traditionally one of the main drivers of India’s economic growth. This is great news for businesses of all sizes. Simply put, when consumers spend more, businesses have more capital to invest in, and increased liquidity throughout the system energises complementary sectors and higher-end goods and services.
But what is the significance of this surge in domestic consumption?
One, as the festive season approaches, these numbers are likely to rise even more. Between August and November, when sales of everything from two-wheelers to real estate are at their peak, Indian consumers tend to spend more. Given how quickly consumption has recovered, the figures for the next three quarters will likely be even better.
Two, for better or worse, demand continues to drive India’s growth story. In a typical fiscal year, private expenditure accounts for approximately 55 per cent of the total national GDP. Furthermore, it has a significant impact on the next major growth driver, Gross Fixed Capital Formation (GFCF), which accounts for the money invested by businesses. As a result, strong domestic consumption translates unintentionally into strong economic growth.
Three, rising household consumption will boost demand for goods and services across industries, especially those involving significant amounts of “discretionary” or luxury spending. Product segments influenced by “premiumisation” trends are included in the latter. These include everything from chocolates and alcoholic beverages to laptops and headphones, as well as clothing and cosmetics. In some categories, such as automobiles, demand for premium products has outpaced demand for entry-level variants. In FY22, for example, premium car sales increased 38 per cent year on year, while lower-priced car sales increased only 7 per cent.
Why is luxury spending increasing in India?
Rising consumer incomes and purchasing power are aiding it: average per capita income has already surpassed USD 2,000 and is expected to exceed USD 12,000 by 2047. Furthermore, the rapid growth of the e-commerce sector and digital transactions has increased customer access to the luxury market. Furthermore, as consumers have become more value- and customisation-oriented, previously dominated by HNWIs, premium segments are rapidly diversifying to include Millennials and non-metro consumers. The typical cohort of HNI and NRI customers has also expanded to include affluent middle-class consumers in some segments, most notably luxury housing, due to the proliferation of remote and hybrid working models.
Furthermore, the premium product space is still in its early stages and remains largely untapped. As a result, market participants have numerous opportunities. For example, while the Indian smartphone market fell by 1 per cent year on year in H1CY22, the premium segment increased by 83 per cent. This segment, however, accounts for only 6 per cent of the total smartphone market.
As domestic consumption continues to rise, premiumisation trends will be boosted across other sectors, from quick-service restaurants (QSRs) and home products to hospitality and healthcare. This has happened before. According to Jun Nie and Andrew Palmer’s paper “Consumer Spending in China: The Past and the Future,” the threefold increase in household spending in China between 2000 and 2015 was accompanied by a sevenfold increase in spending on transportation and communication services.
So, where can investors find investment opportunities?
Discretionary consumption and premiumisation will account for a disproportionate share of growth.
Hospitality and tourism players will benefit from increased air travel, increased demand for top-tier hotels and resorts.
The automotive industry’s clientele for premium car models will become more diverse, especially as the EV revolution gains traction.
The prospects for the entertainment sector are just as promising, with people willing to pay for subscription packages and remain loyal customers even in tier-2 and tier-3 cities as long as there is content worth the money.
Companies in real estate, home-related products, and the FMCG personal care space will also benefit greatly.
The key takeaway is that Indian consumer markets will continue to be a key focus area for global public and private equity investors. Existing and new companies will generate hundreds of billions of dollars in market capitalisation.
To summarise, domestic demand will likely continue to drive India’s economic growth story, which will be increasingly influenced by the discretionary spending of a growing cohort of “premium” consumers. This trend presents an important opportunity for investors to get a head start on a veritable 21st-century gold rush.
(The views expressed in this article are personal and that of the authors. The authors head AltG, a firm that Offers Proprietary Research That Clients Leverage to Identify and Execute High Growth Capital Allocation Opportunities. You can reach them at ideas@altgind.com)
Business
Panvel Municipal Corporation Clears ₹48.40 Crore Gadhi River Bridge Project To Ease Traffic Congestion On Panvel–Karanjade Stretch
Panvel, November 14: In a major infrastructure push aimed at reducing traffic congestion and improving connectivity, the Panvel Municipal Corporation has cleared a proposal to construct a new bridge over the Gadhi River near the Karanjade sewage pumping station.
Municipal Commissioner and Administrator Mangesh Chitale approved the plan following demands raised by Panvel MLA Prashant Thakur and Uran MLA Mahesh Baldi, who highlighted the daily inconvenience faced by commuters travelling between Panvel, Karanjade and Vadghar’s CIDCO colonies.
According to civic officials, the existing bridge toward Karanjade routinely experiences heavy traffic, often resulting in prolonged congestion. With the upcoming Navi Mumbai International Airport expected to increase traffic volumes even further, the civic body believes the new bridge will be a “critical link” on the Panvel–Karanjade stretch.
The project, with an estimated cost of Rs 48.40 crore, received administrative approval in the General Body. Construction is expected to begin soon.
As per the sanctioned plan, the bridge will feature four lanes, a length of 240 metres, and a width of 21.5 metres. “It will connect Panvel Municipal Corporation’s 40-feet-wide road on the eastern side with CIDCO’s 20-metre-wide road leading to the Karanjade node on the western side.
This connection will significantly streamline traffic and support future vehicular growth,” said Additional Commissioner Ganesh Shete.
For the project, No Objection Certificates (NOCs) will be sought from CIDCO, the Water Resources Department, and the Public Works Department. The conceptual design will undergo technical review and approval by either IIT Mumbai or VJTI Mumbai, City Engineer Sanjay Katekar confirmed.
The civic administration expects the bridge to provide major relief to residents and improve overall mobility in the rapidly developing Panvel–Karanjade region.
Mumbai, Nov 14: Indian equity indices recovered from early losses to end the session on a positive note on Friday as the National Democratic Alliance (NDA) headed towards a landslide win in the Bihar elections.
The key indices remained volatile throughout the session as counting for votes for Bihar’s Assembly election continues.
Sensex settled at 84,562.78, up 84.11 points or 0.10 per cent. The share index started the session at 84,060.14, falling over 400 points against last day’s closing of 84,478.67 amid caution ahead of Bihar election results. However, the index jumped over 550 points from the day’s low to close in green.
Nifty closed at 25,910.05, up 30.90 points or 0.12 per cent.
“Indian markets today witnessed a roller-coaster session with the benchmark index Nifty showing sharp two-sided moves. In the first half, Nifty surged and tested the crucial 26,000 level before facing resistance and slipping lower later in the day,” Ashika Institutional Equities said in its note.
Volatility remained elevated as investors stayed cautious ahead of Bihar election results, which hold significant political importance.
Tata Motors, Eternal, Axis Bank, BEL, Trent, SBI, Sun Pharma, Bajaj Finance, Adani Airports, Hindustan Unilever, Asian Paints, ITC and NTPC were the top gainers from the Sensex basket. Infosys, Tata Steel, Tata Motors PV, ICICI Bank, Maruti Suzuki and Tech Mahindra ended the session lower.
Sectoral indices experienced a mixed approach with selling in the IT and auto sectors and buying in the FMCG, banking and finance stocks. Nifty Bank rose 135 points or 0.23 per cent, Nifty Fin Services jumped 95 points or 0.35 per cent, and Nifty FMCG closed 317 points or 0.57 per cent higher. While Nifty IT slipped 378 points or 1.03 per cent, and Nifty Auto fell 143 points or 0.52 per cent.
Broader market followed suit as well, with Nifty Midcap 100 closed flat, Nifty Small Cap 100 rose 68 points or 0.38 per cent, and Nifty 100 ended the session slightly up.
Rupee traded in a narrow range near 88.70 as the dollar index remained flat around $99.20, offering limited directional cues.
“With no major U.S. data releases due to the recent shutdown, the market stayed largely dependent on flows, where mixed FII activity and consistent DII buying kept the rupee in a confined band. Crude prices have begun to rebound, and if WTI sustains above $60, it may add fresh pressure on the rupee in the coming sessions. Overall, the rupee is expected to remain range-bound with levels seen between 88.45–88.95,” said Jateen Trivedi of LKP Securities.
New Delhi, Nov 14: The Enforcement Directorate (ED) will not grant any virtual appearance to Reliance ADAG Group Chairman Anil D. Ambani after the latter sought it in response to a summons sent by the investigative agency to appear before it for questioning in a money laundering case, according to sources on Friday.
Anil Ambani skipped the ED summons to appear for the second round of questioning at the agency’s Delhi headquarters on Friday (November 14).
As per ED sources, no virtual appearance will be given to Anil Ambani, as requested. The regulator, however, has received an email from him regarding his availability via virtual means.
Anil Ambani, in a media statement, said that he is “willing to offer to appear by virtual means”, adding that he will “fully cooperate with ED on all matters”.
The statement claimed that “ED summons to Anil D. Ambani relate to a Foreign Exchange Management Act (FEMA) inquiry and not to any matter under the Prevention of Money Laundering Act (PMLA)”.
The summons concerns a 2010 domestic EPC contract for the Jaipur–Reengus (JR) Toll Road and concerns issues associated with a road contractor, with no foreign exchange component, it said.
“Anil D. Ambani is not a member of the Board of Reliance Infrastructure. He served the company for about fifteen years, from April 2007 to March 2022, only as a non-executive director, and was never involved in the day-to-day management of the company,” it added.
The ED had summoned Anil Ambani again on November 14 for questioning in the money laundering case against the conglomerate. He faced a gruelling, around nine-hour interrogation regarding an alleged Rs 17,000-crore loan fraud case at ED headquarters in August.
The financial probe agency had earlier attached 42 properties worth over Rs 3,083 crore in the bank fraud cases of Reliance Communications Ltd. (RCOM), Reliance Commercial Finance Ltd., and Reliance Home Finance Ltd.
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